AerCap Holdings NV (AER) is an aircraft leasing company. Its major activities include leasing, financing, sales, and management of commercial aircraft and engines. They also provide aircraft asset management and corporate services to securitization vehicles, joint ventures, and other third parties.
In the company’s most recent quarter end, its earnings beat expectations and rose 24.5% year over year. This was due to a rapid recovery in air travel in many of the world’s major markets. This led to increased demand for AER’s aircraft and an increase in its cash flows. Management is highly optimistic that the global leasing environment will continue to rebound in the months ahead.
At the end of June, the company had $11.4 billion in cash compared to no short-term debt. AER also has a gross margin of 55%, which is much higher than the industry average of 18.6%. Analysts forecast earnings to rise 182.1% for the year.
The stock appears undervalued with a trailing P/E of 3.02 and a forward P/E of 9.34. AER has shown bullish momentum since mid-July as shown in the chart below. This has led to a Momentum Grade of B in our POWR Ratings system.
Take a look at the 1-year chart of AER below with added notations:
AER hasn’t made much progress since hitting its March high, thanks to the tough resistance having been formed at 62.50 (red). That level has sent the stock back multiple times over the course of the past 6-7 months. AER has turned back towards that mark again, and a break through it could lead to another leg up for the stock.
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The ideal long position on the stock would be on a breakout above the 52-week high and resistance level of $62.50, with a protective stop placed below the entry point.
The company is expected to report third-quarter earnings on November 10th, so keep an eye out for that.
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AER shares rose $0.13 (+0.21%) in premarket trading Tuesday. Year-to-date, AER has gained 36.68%, versus a 21.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.
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